NZD/USD finds support near 0.6700, upside potential seems limited amid geopolitical risks
- NZD/USD witnessed aggressive selling during the Asian session amid a fresh wave of risk-off trade.
- Russia’s invasion of Ukraine took its toll on the risk sentiment and benefitted the safe-haven USD.
- The bearish pressure, however, abated near the 0.6700 mark, warranting some caution for bears.
The NZD/USD pair quickly recovered a few pips from the Asian session low and was last seen trading around the 0.6730-0.6735 region, still down nearly 0.60% for the day.
The pair witnessed aggressive selling during the early part of the trading on Thursday and extended the overnight pullback from over one-month high, touched in reaction to a more hawkish RBNZ outlook. The worsening situation in Ukraine triggered a massive sell-off across the global equity markets, which boosted the safe-haven US dollar and weighed heavily on the perceived riskier kiwi.
In the latest development, Russian President Vladimir Putin authorized a special military operation in Donbas. NATO also confirmed that an official invasion of Ukraine has begun. US President Joe Biden issued a statement shortly after the news and called the attack unprovoked and unjustified. Biden also mentioned that the US and its allies will respond in a united and decisive way.
Adding to this, German Chancellor Olaf Scholz said that the attack on Ukraine is a blatant breach of international law and that Russia must immediately cease its military action. The European Commission President Von der Leyen also condemned Russia's move. This followed Putin's warning of retaliation in case of any foreign interference and fueled fears about a further escalation of tensions.
The NZD/USD pair, however, managed to find decent support near the 0.6700 mark, which should now act as a pivotal point for short-term traders. That said, any meaningful upside seems elusive as geopolitical tensions would keep investors on edge and benefit the safe-haven buck. That said, bears are likely to wait for sustained break below the aforementioned handle before placing fresh bets.
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